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SYNOPSIS
SYLLABUS
9.ID.; ID.; ID.; ID.; ID.; EFFECTIVE ONLY UPON RECEIPT THEREOF. — To be effective,
a written notice of termination must be served on the employee. Allied Bank could not
terminate Galanida on 1 September 1994 because he had not received as of that date the
notice of Allied Bank's decision to dismiss him. Galanida's dismissal could only take effect
on 5 October 1994, upon his receipt of the Memo. For this reason, Galanida is entitled to
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backwages for the period from 1 September 1994 to 4 October 1994. Under the
circumstances, we also nd an award of P10,000 in nominal damages proper. Courts
award nominal damages to recognize or vindicate the right of a person that another has
violated. The law entitles Galanida to receive timely notice of Allied Bank's decision to
dismiss him. Allied Bank should have exercised more care in issuing the notice of
termination.
DECISION
CARPIO , J : p
The Case
Before the Court is a petition for review 1 assailing the Decision 2 of 27 April 2000
and the Resolution of 8 August 2000 of the Court of Appeals in CA-G.R. SP No. 51451. The
Court of Appeals upheld the Decision 3 of 18 September 1998 and the Resolution of 24
December 1998 of the National Labor Relations Commission ("NLRC") in NLRC Case No. V-
000180-98. The NLRC modi ed the Decision dated 23 December 1997 of Labor Arbiter
Dominador A. Almirante ("Labor Arbiter") in NLRC Case No. RAB VII-05-0545-94 holding
that Allied Banking Corporation ("Allied Bank") illegally dismissed Potenciano L. Galanida
("Galanida"). The NLRC awarded Galanida separation pay, backwages, moral and
exemplary damages, and other amounts totaling P1,264,933.33.
Antecedent Facts
For a background of this case, we quote in part from the Decision of the Court of
Appeals:
Private respondent Potenciano Galanida was hired by petitioner Allied
Banking Corporation on 11 January 1978 and rose from accountant-book(k)eeper
to assistant manager in 1991. His appointment was covered by a "Notice of
Personnel Action" which provides as one of the conditions of employment the
provision on petitioner's right to transfer employees:
"In view of the foregoing, please explain in writing within three (3)
days from receipt hereof why no disciplinary action should be meted
against you for your having refused to follow instructions concerning the
foregoing transfer and reassignment." . . . 4
On 16 June 1994, Galanida replied that "(w)hether the bank's penalty for my refusal
be Suspension or Dismissal . . . it will all the more establish and fortify my complaint now
pending at NLRC, RAB 7." 5 In the same letter, he charged Allied Bank with discrimination
and favoritism in ordering his transfer, thus:
. . . What I cannot decipher now under the headship of Mr. Olveda is
management's discriminatory act of transferring only the long staying
accountants of Cebu in the guise of its exercise of management prerogative when
in truth and in fact, the ulterior motive is to accommodate some new o cers who
happen to enjoy favorable connection with management. How can the bank ever
justify the transfer of Melinda T. Co, a new o cer who had experienced being
assigned outside of Cebu for more than a year only to Tabunok Branch? If the
purpose is for check and balance, is management implying that Melinda Co can
better carry out such function over Mr. Larry Sabelino, who is a seasoned and
experienced accountant or any of the Metro Cebu accountants for that matter?
Isn't this act of management an obvious display of favoritism? . . . 6
In view of the foregoing, please be informed that the Bank has terminated
your services effective September 1, 1994 and considered whatever benefit, if any,
that you are entitled as forfeited in accordance with 04, V Administrative
Penalties, page 6 of the Bank's EDPP which provides as follows:
"04.Dismissal.
Dismissal is a permanent separation for cause . . .
Notice of termination shall be issued by the Investigation
Committee subject to the con rmation of the President or his authorized
representative as o cer/employee who is terminated for cause shall not
be eligible to receive any bene t arising from her/his employment with the
Bank or to termination pay."
It is understood that the termination of your service shall be without
prejudice to whatever legal remedies which the Bank may have already
undertaken and/or will undertake against you.
Please be guided accordingly. (Emphasis supplied) 8
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The Ruling of the Labor Arbiter
After several hearings, the Labor Arbiter held that Allied Bank had abused its
management prerogative in ordering the transfer of Galanida to its Bacolod and Tagbilaran
branches. In ruling that Galanida's refusal to transfer did not amount to insubordination,
the Labor Arbiter misquoted this Court's decision in Dosch v. NLRC, 9 thus:
As a general rule, the right to transfer or reassign an employee is
recognized as an employer's exclusive right and the prerogative of management
(Abbott Laboratories vs. NLRC, 154 SCRA 713 [1987]).
The exercise of this right, is not however, absolute. It has certain
limitations. Thus, in Helmut Dosch vs. NLRC, et al. 123 SCRA 296 (1983), the
Supreme Court, ruled:
"While it may be true that the right to transfer or reassign an
employee is an employer's exclusive right and the prerogative of
management, such right is not absolute. The right of an employer to freely
select or discharge his employee is limited by the paramount police power .
. . for the relations between capital and labor are not merely contractual but
impressed with public interest. . . . And neither capital nor labor shall act
oppressively against each other. IaESCH
The Labor Arbiter reasoned that Galanida's transfer was inconvenient and prejudicial
because Galanida would have to incur additional expenses for board, lodging and travel.
On the other hand, the Labor Arbiter held that Allied Bank failed to show any business
urgency that would justify the transfer.
The Labor Arbiter also gave credence to Galanida's claim that Allied Bank gave Ms.
Co special treatment. The Labor Arbiter stated that Allied Bank deliberately left out Ms.
Co's name from the list of accountants transferred to Cebu as contained in Allied Bank's
letter dated 13 June 1994. However, Mr. Regidor Olveda, Allied Bank's Vice President for
Operations Accounting, testi ed that the bank transferred Ms. Co to the Tabunok, Cebu
branch within the first half of 1994.
Still, the Labor Arbiter declined to award Galanida back wages because he was not
entirely free from blame. Since another bank had already employed Galanida, the Labor
Arbiter granted Galanida separation pay in lieu of reinstatement. The dispositive portion of
the Labor Arbiter's Decision of 23 December 1997 provides:
WHEREFORE, premises considered, judgment is hereby rendered ordering
respondent Allied Banking Corporation to pay complainant the aggregate total
amount of Three Hundred Twenty Four Thousand Pesos (P324,000.00)
representing the following awards:
a)Separation pay for P272,000.00;
b)Quarter bonus for 1994 — P16,000.00;
SO ORDERED. 1 1
All other claims are dismissed for lack of basis. The other respondents are
dropped for lack of su cient basis that they acted in excess of their corporate
powers.
Allied Bank led a motion for reconsideration which the NLRC denied in its
Resolution of 24 December 1998. 1 3
Dissatis ed, Allied Bank led a petition for review questioning the Decision and
Resolution of the NLRC before the Court of Appeals.
The Ruling of the Court of Appeals
Citing Dosch v. NLRC , 1 4 the Court of Appeals held that Galanida's refusal to comply
with the transfer orders did not warrant his dismissal. The appellate court ruled that the
transfer from a regional o ce to the smaller Bacolod or Tagbilaran branches was
effectively a demotion. The appellate court agreed that Allied Bank did not afford Galanida
procedural due process because there was no hearing and no notice of termination. The
Memo merely stated that the bank would issue a notice of termination but there was no
such notice.
The Court of Appeals affirmed the ruling of the NLRC in its Decision of 27 April 2000,
thus:
WHEREFORE, for lack of merit, the petition is DISMISSED and the assailed
Decision of public respondent NLRC is AFFIRMED.
SO ORDERED. 1 5
Allied Bank led a motion for reconsideration which the appellate court denied in its
Resolution of 8 August 2000. 1 6
On 26 April 2001, Allied Bank appealed the appellate court's decision and resolution
to the Supreme Court. Allied Bank prayed that the Supreme Court: (1) issue a temporary
restraining order or writ of preliminary injunction ex parte to restrain the implementation or
execution of the questioned Decision and Resolution; (2) declare Galanida's termination as
valid and legal; (3) set aside the Court of Appeals' Decision and Resolution; (4) make
permanent the restraining order or preliminary injunction; (5) order Galanida to pay the
costs; and (6) order other equitable reliefs.
The Issues
Allied Bank raises the following issues:
1.WHETHER UNDER THE FACTS PRESENTED THERE IS LEGAL BASIS IN
PETITIONER'S EXERCISE OF ITS MANAGEMENT PREROGATIVE.
In sum, Allied Bank argues that the transfer of Galanida was a valid exercise of its
management prerogative. Allied Bank contends that Galanida's continued refusal to obey
the transfer orders constituted willful disobedience or insubordination, which is a just
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cause for termination under the Labor Code.
On the other hand, Galanida defended his right to refuse the transfer order. The
memorandum for Galanida led with this Court, prepared by Atty. Loreto M. Durano, again
misquoted the Court's ruling in Dosch v. NLRC, thus:
. . . His [Galanida's] refusal to transfer falls well within the ruling of the
Supreme Court in Helmut Dosch vs. NLRC, et al., 123 SCRA 296 (1983) quoted as
follows:
xxx xxx xxx
There is also no basis for the nding that Allied Bank was guilty of unfair labor
practice in dismissing Galanida. Unfair labor practices relate only to violations of "the
constitutional right of workers and employees to self-organization" 3 2 and are limited to
the acts enumerated in Article 248 of the Labor Code, none of which applies to the present
case. There is no evidence that Galanida took part in forming a union, or even that a union
existed in Allied Bank.
This leaves the issue of whether Galanida could validly refuse the transfer orders on
the ground of parental obligations, additional expenses, and the anguish he would suffer if
assigned away from his family.
The Court has ruled on this issue before. In the case of Homeowners Savings and
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Loan Association, Inc. v. NLRC, 3 3 we held:
The acceptability of the proposition that transfer made by an employer for
an illicit or underhanded purpose — i.e., to defeat an employee's right to self-
organization, to rid himself of an undesirable worker, or to penalize an employee
for union activities — cannot be upheld is self-evident and cannot be gainsaid.
The di culty lies in the situation where no such illicit, improper or underhanded
purpose can be ascribed to the employer, the objection to the transfer being
grounded solely upon the personal inconvenience or hardship that will be caused
to the employee by reason of the transfer. What then?
This was the very same situation we faced in Phil. Telegraph and
Telephone Corp. v. Laplana . In that case, the employee, Alicia Laplana, was a
cashier at the Baguio City Branch of PT&T who was directed to transfer to the
company's branch o ce at Laoag City. In refusing the transfer, the employee
averred that she had established Baguio City as her permanent residence and that
such transfer will involve additional expenses on her part, plus the fact that an
assignment to a far place will be a big sacri ce for her as she will be kept away
from her family which might adversely affect her e ciency. In ruling for the
employer, the Court upheld the transfer from one city to another within the country
as valid as long as there is no bad faith on the part of the employer. We held then:
Galanida, through counsel, invokes the Court's ruling in Dosch v. NLRC . 3 4 Dosch,
however, is not applicable to the present case. Helmut Dosch refused a transfer
consequential to a promotion. We upheld the refusal because no law compels an
employee to accept a promotion, and because the position Dosch was supposed to be
promoted to did not even exist at that time. 3 5 This left as the only basis for the charge of
insubordination a letter from Dosch in which the Court found "not even the slightest hint of
defiance, much less . . . insubordination." 3 6
Moreover, the transfer of an employee to an overseas post, as in the Dosch case,
cannot be likened to a transfer from one city to another within the country, 3 7 which is the
situation in the present case. The distance from Cebu City to Bacolod City or from Cebu
City to Tagbilaran City does not exceed the distance from Baguio City to Laoag City or
from Baguio City to Manila, which the Court considered a reasonable distance in PT&T v.
Laplana. 3 8
The refusal to obey a valid transfer order constitutes willful disobedience of a lawful
order of an employer. 3 9 Employees may object to, negotiate and seek redress against
employers for rules or orders that they regard as unjust or illegal. However, until and unless
these rules or orders are declared illegal or improper by competent authority, the
employees ignore or disobey them at their peril. 4 0 For Galanida's continued refusal to
obey Allied Bank's transfer orders, we hold that the bank dismissed Galanida for just cause
in accordance with Article 282(a) of the Labor Code. 4 1 Galanida is thus not entitled to
reinstatement or to separation pay.
The rst written notice was embodied in Allied Bank's letter of 13 June 1994. The
rst notice required Galanida to explain why no disciplinary action should be taken against
him for his refusal to comply with the transfer orders.
On the requirement of a hearing this Court has held that the essence of due process
is simply an opportunity to be heard. 4 2 An actual hearing is not necessary. The exchange
of several letters, in which Galanida's wife, a lawyer with the City Prosecutor's O ce,
assisted him, gave Galanida an opportunity to respond to the charges against him.
The remaining issue is whether the Memo dated 8 September 1994 sent to Galanida
constitutes the written notice of termination required by the Omnibus Rules. In nding that
it did not, the Court of Appeals and the NLRC cited Allied Bank's rule on dismissals, quoted
in the Memo, that, "Notice of termination shall be issued by the Investigation Committee
subject to the con rmation of the President or his authorized representative." 4 3 The
appellate court and NLRC held that Allied Bank did not send any notice of termination to
Galanida. The Memo, with the heading "Transfer and Reassignment," was not the
termination notice required by law.
We do not agree.
Even a cursory reading of the Memo will show that it unequivocally informed
Galanida of Allied Bank's decision to dismiss him. The statement, "please be informed that
the Bank has terminated your services effective September 1, 1994 and considered
whatever bene t, if any, that you are entitled [to] as forfeited . . ." 4 4 is plainly worded and
needs no interpretation. The Memo also discussed the ndings of the Investigation
Committee that served as grounds for Galanida's dismissal, The Memo referred to
Galanida's "open de ance and refusal" to transfer rst to the Bacolod City branch and then
to the Tagbilaran City branch. The Memo also mentioned his continued refusal to report
for work despite the denial of his application for additional vacation leave. 4 5 The Memo
also refuted Galanida's charges of discrimination and demotion, and concluded that he
had violated Article XII of the bank's Employee Discipline Policy and Procedure.
The Memo, although captioned "Transfer and Reassignment," did not preclude it
from being a notice of termination. The Court has held that the nature of an instrument is
characterized not by the title given to it but by its body and contents. 4 6 Moreover, it
appears that Galanida himself regarded the Memo as a notice of termination. We quote,
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from the Memorandum for Private Respondent-Appellee, as follows:
The proceedings may be capsulized as follows:
1.On March 13, 1994 4 7 Private Respondent-Appellee led before the
Region VII Arbitration Branch a Complaint for Constructive Dismissal. A copy of
the Complaint is attached to the Petition as Annex "H";
xxx xxx xxx
Footnotes
1.Under Rule 45 of the Rules of Court.
4.Rollo, p. 82.
5.Ibid., p. 123.
6.Ibid.
7.Ibid., p. 156.
8.Ibid.
14.Supra, see note 9. The Court of Appeals cited Dosch v. NLRC accurately.
15.Rollo, p. 82.
16.Ibid., p. 100.
17.Ibid., p. 45.
18.Rollo, p. 475. Emphasis supplied by counsel.
20.French Oil Mill Machinery Co., Inc. v. Court of Appeals, 356 Phil. 780 (1998).
21.Insular Life Assurance Co., Ltd., Employees Association-Natu v. Insular Life Assurance Co.,
Ltd., No. L-25291, 30 January 1971, 37 SCRA 244.
22.Solid Homes, Inc. v. Court of Appeals, 341 Phil. 261 (1997).
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23.OSS Security & Allied Services, Inc. v. NLRC, 382 Phil. 35 (2000); Abbott Laboratories Inc. v.
NLRC, No. L-76959, 12 October 1987, 154 SCRA 713.
24.Castillo v. National Labor Relations Commission, 367 Phil. 605 (1999).
25.Ibid.
a.The duties of personnel handling cash, securities and bookkeeping records should be rotated.
b.Rotation assignment should be irregular, unannounced and long enough to permit disclosure
of any irregularities or manipulations.
30.Rollo, p. 116. Portions of this letter were also quoted in the Court of Appeals' Decision.
31.Pantranco North Express, Inc. v. NLRC, 373 Phil. 520 (1999) citing Philippine Japan Active
Carbon Corp. v. NLRC, G.R. No. 83239, 8 March 1989, 171 SCRA 164.
32.Article 247 of the Labor Code.
35.Ibid.
36.Ibid.
37.PT&T v. Laplana, G.R. No. 76645, 23 July 1991, 199 SCRA 485.
38.Ibid.
39.Homeowners Savings and Loan Association, Inc. v. NLRC, G.R. No. 97067, 26 September
1996, 262 SCRA 406.
(a)Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work; . . .
42.Gabisay v. NLRC, 366 Phil. 593 (1999) citing Tan v. NLRC, 359 Phil. 499 (1998).
43.Rollo, p. 156.
44.Ibid.
As a manifestation of your open defiance and refusal to follow instruction concerning your
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transfer, you filed several applications for vacation leaves the latest of which was that
dated May 31, 1994 which was approved for an unextendible (sic) period of six (6) days
or until June 10, 1994 due to exigency of the service. So far management had approved
a total of more than fifteen (15) days which you have availed for [the] current year . . .
47.The complaint indicates that it was filed on 13 May 1994, not on 13 March 1994.
50.Ibid., p. 164.
51.Sec. 2(d)(iii), Rule 1, Book VI, Omnibus Rules Implementing the Labor Code. Quoted earlier.